RI Delegation Urges Trump Administration to Correct Wage Disparity and Fairly Reimburse RI Hospitals

Feb 5, 2019

WASHINGTON, DC – U.S. Senators Jack Reed and Sheldon Whitehouse and U.S. Congressmen Jim Langevin and David Cicilline have sent a letter to U.S. Department of Health and Human Services (HHS) Secretary Alexander Azar urging the Trump Administration to reverse a policy that unfairly targets hospitals in Rhode Island.  The Congressional delegation is calling on the Trump Administration to reinstate the ‘imputed rural floor,’ a longstanding policy that ensures hospitals are properly reimbursed for delivering care to Medicare recipients. 

 

The letter notes that the wage-based Medicare reimbursement disparity -- created when the policy was ended as part of the Trump Administration’s Fiscal Year 2019 Inpatient Prospective Payment System (IPPS) rule -- could negatively impact the fiscal condition of Rhode Island’s hospitals and threaten patients’ access to care.  The delegation is urging the Administration to correct this disparity in the FY 2020 IPPS rule.

 

From Fiscal Year 2013 to Fiscal Year 2018, the IPPS rules included an alternative methodology for calculating the imputed rural floor in Rhode Island, which was key to improving the overall fiscal condition of Rhode Island’s health care system and maintaining access to care for Rhode Islanders. 

 

“Unfortunately, this policy was abruptly ended in the final FY 2019 IPPS rule, leading to $28 million in cuts to Medicare reimbursements for hospitals in Rhode Island” the letter reads.  “If the alternative methodology for calculating the imputed rural floor is not reinstated in the FY 2020 IPPS rule, we expect hospitals in Rhode Island to face similar cuts, compounding the cuts from the previous year, threatening access to hospital care in Rhode Island.”

 

“These cuts have a ripple effect throughout the insurance market in the state, because private insurance reimbursement rates under the Medicare Advantage program are based on underlying Medicare reimbursements.  This has effectively doubled down on cuts to hospitals in Rhode Island, which have some of the lowest operating margins in the country,” the letter continues.  “We urge you to reverse your decision to end this payment policy for hospitals in Rhode Island and reinstate the alternative methodology for calculating the imputed rural floor in the FY 2020 IPPS rule.”  

 

Under the Trump Administration’s policy, Rhode Island, along with Delaware and New Jersey, are designated as “all-urban” states under Medicare guidelines.

 

The health care industry remains a crucial sector of Rhode Island’s economy, with 15 hospitals and over 30,800 health care workers employed by the industry.

 

The full text of the letter can be found below.

 

The Honorable Alexander Azar

Secretary

The Department of Health and Human Services

200 Independence Ave., SW

Washington DC, 20201

 

Dear Secretary Azar:

 

We write to urge you to reinstate the imputed rural floor, a longstanding policy correcting a wage index disparity for hospitals in Rhode Island in the proposed Fiscal Year (FY) 2020 Inpatient Prospective Payment System (IPPS).  From FY 2013 to FY 2018, the IPPS rules have included an alternative methodology for calculating the imputed rural floor in Rhode Island, which has been key to improving the overall fiscal condition of Rhode Island’s health care system and maintaining access to care for Rhode Islanders. 

 

Unfortunately, this policy was abruptly ended in the final FY 2019 IPPS rule, leading to $28 million in cuts to Medicare reimbursements for hospitals in Rhode Island.  If the alternative methodology for calculating the imputed rural floor is not reinstated in the FY 2020 IPPS rule, we expect hospitals in Rhode Island to face similar cuts, compounding the cuts from the previous year, threatening access to hospital care in Rhode Island.

 

These cuts have a ripple effect throughout the insurance market in the state, because private insurance reimbursement rates under the Medicare Advantage program are based on underlying Medicare reimbursements.  This has effectively doubled down on cuts to hospitals in Rhode Island, which have some of the lowest operating margins in the country.

 

The alternative methodology for calculating the imputed rural floor had been in place for many years to address the disadvantages faced by all-urban states, like Rhode Island, which do not benefit from any other payment programs for rural areas.  This policy protected our hospitals from falling to some of the lowest reimbursement rates in the country, all the while competing with some of the most highly reimbursed urban and academic hospitals in New England.

 

Hospitals are often the economic backbone in a community, providing well-paying jobs for health care workers, researchers, laboratory technicians, as well as maintenance and administrative workers. Another cut of this magnitude to hospitals in Rhode Island would be detrimental to the state’s economy. 

 

We urge you to reverse your decision to end this payment policy for hospitals in Rhode Island and reinstate the alternative methodology for calculating the imputed rural floor in the FY 2020 IPPS rule.  Thank you for your consideration of this important request and we look forward to working with you to see this policy restored.

 

Sincerely,

 

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